After years of defending its financially underperforming newspapers, News Corporation is now in talks to break up the company and sever its publishing assets, like The Wall Street Journal, The Times of London and The New York Post, from its lucrative entertainment units.

The spinoff proposal will be reviewed by the News Corporation board on Wednesday and a decision to split up the company could be made as early as Thursday.

The possibility signals a sharp reversal in the thinking of Rupert Murdoch about his $53 billion media conglomerate. For years, investors and senior News Corporation executives have pressed for a spinoff of the newspapers, but Mr. Murdoch, a newspaperman at heart who built his company from a single paper in Adelaide, Australia, has consistently rejected those proposals.

But as the company’s cable channels expanded globally, its newspapers have become a financial drag and, in the case of its British tabloids, have hurt its reputation in the fallout over the phone-hacking scandal that led to the closing of the News of the World tabloid.

Top editors and publishers from the company’s newspapers were flown in from around the world and brought together on Tuesday for lunch in a corporate dining room at News Corporation’s Midtown Manhattan headquarters.

In what one employee described as an emotional meeting, Mr. Murdoch, his son James Murdoch and Chase Carey, the company’s chief operating officer, tried their best to quell anxiety and unrest among editors. They worry that the company’s newspapers will lose their economic safety net without the high-performing entertainment assets propping them up.

The senior Murdoch indicated that he was tired of shareholders and analysts regarding the newspapers as a drag on the company and that he believed his publishing business would benefit from its own dedicated management.

News of the possible spinoff was first reported by The Wall Street Journal. News Corporation’s stock climbed 8 percent on Tuesday to close at $21.96 a share, its highest close since 2007.

There are still an enormous number of details to be worked out in any spinoff, including exactly how to split up News Corporation’s assets. One thing is certain: the Murdoch family, which would have a roughly 40 percent voting stake in both new companies, would retain control.

Restive shareholders have often said they would prefer that News Corporation focus on its entertainment units including cable channels like FX and Fox News, the 20th Century Fox studio and Fox Broadcasting. Combined, those assets generated operating profit of $4.6 billion in the year that ended June 2011. The publishing unit, by contrast, contributed $864 million in operating profit in the same period.

Over the last several weeks, Mr. Murdoch — with the financial advice of Goldman Sachs and Centerview Partners and the counsel of Mr. Carey and executive vice president Joel I. Klein, among other executives — came to agree that spinning off the newspapers would be the best way to improve their profitability, said one person close to News Corporation who could not discuss corporate strategy publicly.

“This is an idea everyone has wanted from a purely economic point of view long before the scandal happened,” this person said.

The separate company would include The Journal, The Times of London, The New York Post and as many as 175 other newspapers. It would also house the HarperCollins book business and a newly formed education division run by Mr. Klein, the former New York City schools chancellor and an adviser to Mr. Murdoch.

Mr. Klein would probably hold a senior leadership position in a newly formed company, said one person briefed on the meeting but not authorized to discuss it publicly.

Photo

Chase Carey, chief operating officer of News Corporation, was one of the executives who advised Mr. Murdoch in the possible spinoff of the company's newspapers.Credit
Brian Snyder/Reuters

The entertainment company would have a similar management structure to the current company, with Mr. Murdoch as chief executive; Mr. Carey as chief operating officer; and James Murdoch as deputy chief operating officer, though a person close to the company cautioned that no executive decisions have been made.

Mr. Carey and others have contemplated how to make the publishing company less vulnerable, including making Mr. Klein’s education division a part of the newly formed company. Other units like classified advertising companies and other digital assets like Monster.com, which the company does not own but has considered for acquisition, would be part of the publishing division.

The executive ladder of the separate company has not been established. But two people close to the company said Robert Thomson — managing editor of The Journal and editor in chief of its parent company, Dow Jones & Company, and a close confidante of Rupert Murdoch’s — is a possible candidate for chief executive.

“Dow Jones is the trophy asset, so it make sense,” one of these people said.

The list of well-regarded executives who could lead the new unit could also include Lex Fenwick, the newly named chief executive of Dow Jones, or Tom Mockridge, chief executive of the British newspaper unit News International, according to another person close to the company.

A News Corporation spokesman declined to comment on what the spun off company would look like. In a statement, the company said, “News Corporation confirmed today that it is considering a restructuring to separate its business into two distinct publicly traded companies.”

Mr. Carey has long championed separating the companies to bolster the entertainment divisions. Analysts have said the company suffers from the “Murdoch discount” because of the newspapers its chairman would not part with.

“All the good work they’ve been doing in video lately has just been hurt by weaknesses in print, and there’s no reason for that connection,” said Michael Nathanson, a media analyst at Nomura Securities.

At a Deutsche Bank media conference in Palm Beach, Fla., last March, Mr. Carey said that in the company “certainly there are a number of parties who feel — would push to looking at a way to spin the publishing business separate from the rest.”

He later clarified that he was referring to investors and not News Corporation executives, and said the company stood by its newspapers.

Mr. Murdoch has shunned previous proposals to turn the newspapers into a trust or sell them either as a group or by title, saying “I want to own these,” said a person familiar with Mr. Murdoch’s thinking who was not authorized to discuss private conversations publicly. The current proposal, this person said “is a logical alternative that splits the baby and keeps them within the company.”

In previous media splits, for example E.W. Scripps from Scripps NetworksInteractive and Viacom from CBS, the mature, more traditional company has lagged, some times significantly. For News Corporation, forming a separate entertainment company could help with future acquisitions that require government approval. Last week, News Corporation said it agreed to pay roughly $2.2 billion to acquire Australia’s Consolidated Media Holdings, an investment company in the pay TV business.

Talk of a divided company comes as the British regulatory agency Ofcom investigates whether News Corporation is “fit and proper” to control 39 percent of the satellite broadcaster British Sky Broadcasting. The investigation is a result of the hacking scandal that has in the last year touched on an array of figures, including Prime Minister David Cameron of Britain (who has been accused of being too close to the Murdochs) and James Murdoch, who led the company’s British newspaper operations.

“They’re looking at ways to help Ofcom make a decision that is favorable to News Corporation,” said Thomas Eagan, a media analyst at Canaccord Genuity Securities.

Ofcom said any reorganization moves by News Corporation would have no impact on its investigation. “We haven’t given any timetable on our fit and proper assessment,” a spokesman, Chris Wynn, wrote in an e-mail. “We will make a decision in due course.”

It’s unlikely that even under a separate entertainment-based company News Corporation could revisit in the near term its failed bid for BSkyB, said Todd Juenger, a media analyst at Sanford C. Bernstein & Company. He added, “If the Murdochs are deemed unfit, it’s still them running the separate company.”

Correction: June 28, 2012

Because of an editing error, an article on Wednesday about News Corporation’s potential spinoff of its publishing operations misspelled the surname of an executive considered a candidate to head the new company. He is Robert Thomson, not Thompson. The earlier version also reversed his titles; he is managing editor of The Wall Street Journal and editor in chief of its parent company, Dow Jones & Company.

A version of this article appears in print on June 27, 2012, on page A1 of the New York edition with the headline: At News Corp., A Plan to Sever Publishing Arm. Order Reprints|Today's Paper|Subscribe